63 F. Supp. 3d 149
D. Mass.2014Background
- Arborjet (TREE-age maker) entered a 2008 Sales Agency Agreement with Rainbow (distributor/competitor) that included: a confidentiality/non-disclosure clause prohibiting Rainbow from "engag[ing] in affairs intended to replicate" Arborjet products during the agreement, and a separate post-termination non-compete limited to a specific injection system.
- Arborjet alleges Rainbow, while a distributor, had close access to Arborjet personnel/customers and later developed ArborMectin, an emamectin benzoate product marketed as an "improved TREE-age."
- Rainbow terminated the distributorship in Feb 2013 and began marketing ArborMectin in 2014, including comparative advertising and a website/video claiming faster treatment than TREE-age.
- Arborjet sued (breach of contract; breach of implied covenant; Lanham Act false advertising and false designation; M.G.L. c. 266 § 91; common-law unfair competition) and moved for a preliminary injunction to stop Rainbow marketing, distributing, or selling ArborMectin.
- At the preliminary injunction hearing the court evaluated likelihood of success, irreparable harm, balance of harms, public interest, and required a $500,000 bond given Rainbow's projected sales.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Rainbow breached the Agreement by "engag[ing] in affairs intended to replicate" Arborjet products | Arborjet: Rainbow developed ArborMectin during the distributorship with intent to replicate/compete with TREE-age, violating Section 3 even without proof of misappropriated confidential info | Rainbow: "Replicate" should mean an exact copy; Section 6 non-compete (post-termination) limits Section 3; ArborMectin is materially different | Court: Likely for Arborjet. Section 3 covers intent to replicate during the agreement; differences in final product do not preclude breach. |
| Whether Rainbow breached the implied covenant of good faith and fair dealing | Arborjet: Rainbow knew Section 3 was meant to prevent copying and violated the parties' agreed expectations | Rainbow: No broader implied restriction beyond explicit non-compete; competition permissible | Court: Likely for Arborjet; covenant supports enforcement of Section 3's purpose during the agreement. |
| Whether Rainbow's advertising violates Lanham Act as false or misleading (establishment and non-establishment claims) | Arborjet: Studies supporting ArborMectin are unreliable (small samples, not peer-reviewed); claims like "backed by science" and "30–70% faster" mislead customers | Rainbow: Advertising supported by EPA approval and field trials; sample-size/peer-review criticisms are speculative | Court: Unlikely for Arborjet on Lanham false-ad claim; plaintiff failed to show studies unreliable or actual falsity for superiority claim, though court expressed concern and Rainbow agreed to stop "improved TREE-age" claims. |
| Whether Rainbow's use of TREE-age marks/communications causes likelihood of confusion (false designation of origin) | Arborjet: Rainbow used Arborjet trademarks without attribution, implying common source and causing confusion | Rainbow: Marks are dissimilar, customers are sophisticated, no evidence of actual confusion | Court: Unlikely for Arborjet on false designation claim; likelihood of confusion factors weigh against plaintiff, though Rainbow should attribute marks carefully. |
Key Cases Cited
- Nieves-Marquez v. Puerto Rico, 353 F.3d 108 (1st Cir. 2003) (four-factor preliminary injunction standard and sliding-scale approach)
- Coquico, Inc. v. Rodriguez-Miranda, 562 F.3d 62 (1st Cir. 2009) (likelihood of success is the dominant preliminary-injunction factor)
- Rohm & Haas Elec. Materials, LLC v. Elec. Circuits Supplies, Inc., 759 F. Supp. 2d 110 (D. Mass. 2010) (limits on using confidentiality provisions to create broad non-competes)
- Cashmere & Camel Hair Mfrs. Inst. v. Saks Fifth Ave., 284 F.3d 302 (1st Cir. 2002) (elements for Lanham Act false-advertising claim)
- Spalding Sports Worldwide, Inc. v. Wilson Sporting Goods Co., 198 F. Supp. 2d 59 (D. Mass. 2002) (reliability of studies for establishment claims under the Lanham Act)
- Keds Corp. v. Renee Int'l Trading Corp., 888 F.2d 215 (1st Cir. 1989) (eight-factor test for likelihood of confusion)
- Ross-Simons of Warwick v. Baccarat, Inc., 102 F.3d 12 (1st Cir. 1996) (definition of irreparable harm in trademark/business contexts)
- Braintree Labs. v. Citigroup Global Markets Inc., 622 F.3d 36 (1st Cir. 2010) (sliding-scale assessment of irreparable harm relative to likelihood of success)